Before clicking OK in the Advanced Settings window you should see an Application Pool setting like the following:

Of course, you could also change frameworks for an existing application pool, or create a new one targeting ASP.NET 4:

Reload the website

You should now be able to browse your website! I got the Public Templates project up and running on ASP.NET 4.0 simply by changing target frameworks, rebuilding, and switching application pools in IIS.